South African Central Bank to Revise Risk Outlook as Middle East Conflict Drives Oil Above $94

South Africa’s central bank plans new risk scenarios as rising oil prices and rand volatility reshape the country’s inflation outlook.

The South African Reserve Bank will redraw its economic risk scenarios ahead of its March 26 policy meeting as global tensions push oil prices higher.

Governor Lesetja Kganyago said the earlier adverse scenario used during the January meeting is no longer relevant due to rapidly changing geopolitical conditions. At the time, policymakers assumed oil could average $75 per barrel and the South African rand could weaken to 18.50 against the U.S. dollar.

However, rising conflict involving Iran, Israel, and the United States has pushed Brent crude prices above $94 per barrel, while the rand weakened near 16.82 per dollar.

Kganyago emphasized that exchange rate movements have a stronger effect on South Africa’s inflation than oil prices. Policymakers will focus on whether current market shocks are temporary or persistent before adjusting interest rates, as global geopolitics continues influencing financial markets and emerging economies.

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